This septuagenarian woman can’t retire as she has massive credit card debt. Key money lessons to learn from it

Susan Cannon, 73, holds 19 credit cards. She is so accustomed to using her credit cards that she now buys everything, including groceries, with them. As a result, her credit card bills have reached around $40,000 ( ₹36 lakh). Read this Business Insider report to know more about this case.

This is primarily because of the high interest rates (12.15% to 34.99%) that credit card bills incur. This resident of rural Texas lost her job during COVID, when her problems began to mount.

Although several people recommend using multiple credit cards to make the most of rewards and cashbacks, they don't urge (at least not with the same intensity) paying bills on time. Because if you don't, exorbitant interest rates would lead to a massive debt burden like Susan currently faces.

These are a few money lessons one can learn from it.

I. Multiple cards for a reason: Some people hold multiple cards so that they can use one credit card to pay the bill for another card. This may lead to a cycle of late payments, which, when broken, can trigger confusion and late fees. However, if you really want to keep multiple credit cards, you should have a strong reason. For example, there could be one co-branded card for cashback, another travel card, and one card for online payments, etc.

II. Avoid missing last date: Regardless of how many cards you keep, it is important to pay your bills on time. Missing one last date results in the levy of a late fee and interest at a rate of 2 to 4 per cent per month.

III. Minimum due: If, for some reason, you are not able to pay your bills on time, you could at least pay the minimum due. This would save you from late fees and interest on the full amount due.

Disclaimer: MintMoney has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. MintMoney does not promote or encourage taking credit, as it comes with a set of risks, such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.

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